The "three strikes" law, which came into effect in September, requires internet companies to issue warning notices to customers alleged to have downloaded copyright content illegally, such as music or movies, if requested by the rights holder.

After a third warning, a case can be brought before the Copyright Tribunal, which can fine an offender up to $15,000.

In submissions made to the Economic Development Ministry and revealed to Fairfax Media under the Official Information Act, both Rianz and the Federation Against Copyright Theft called for the $25 fee paid to internet providers for issuing the notices to be slashed.

However telecommunications companies want the fee to be increased, with Telecom calling for it to be increased to $104, as complying with the law change has so far cost $534,416.

The Federation Against Copyright Theft, which was formed by the Motion Picture Association, said the number of times top-200 movies were illegally viewed online by Kiwis dropped from 110,000 in August, to about 50,000 the next month, following the legislation.

However it said progress has since stalled.

The organisation has not pushed for any notices to be issued due to the $25 fee.

From October to April, the Recording Industry Association of New Zealand has ordered 2766 infringement notices to people suspected of pirating music. Of those, 58 were challenged by users, but only two of those challenges were deemed "valid".

According to the submission, Telecom, TelstraClear and Vodafone have each had a customer receive a third notice, however Rianz did not take action and the enforcement notices have since lapse.

Rianz did not comment to Fairfax on why it did not take the alleged infringers to the Copyright Tribunal.